Lotteries, at least state-run lotteries, in England went back to the time of Queen Elizabeth, the first recorded one being from 1566—1569. At the time, there were two main types of lottery. Common was a `zero-sum’ lottery where the amount given away as prizes equaled the face-value of the tickets sold. In this case, the lottery essentially acted as an interest-free loan to the state for the length of the lottery, which could run for several years. The accounting gets more complex when some of the prizes were in the form of government debt. The other form was explicitly to raise funds, often for worthy causes, such as the 1612 lottery is support of the Jamestown colony in Virginia, or the lottery to support the founding of the British Museum in 1753. The lottery of 1726 was a rare occasion when the state lost money.
The 1726 lottery was designed to raise £1,000,000 through the sale of 100,000 tickets at £10 each. The procedure then was that each ticket would be drawn and would either win a prize or `benefit’, or be recorded as a `blank’ or non-winning ticket. The top benefit was £20,000, an enormous sum of money, followed by two second prizes of £10,000 and so on down to 360 prizes of £100 and 7550 prizes of £20. The process of drawing all 100,000 tickets took weeks and the news was steadily reported in the papers. The 8000 winning tickets were worth a total of £310,000, so the remaining £690,000 was returned via the Blanks, each paying back £7 10s of the original £10 cost.
Not everyone could afford the full £10 for a ticket and this gave an opportunity for enterprising brokers to sell fractions of an interest. John Bagnall, publisher of the Ipswich Journal, offered his services buying fractions of a ticket, `for those who desire it, I will procure Shares of Tickets, viz. an 8th for 25s. and so in Proportion, whereby they will have a chance for 2500l at 6d each for my trouble of transmitting the money to London, and having a return’. Even 25 shillings was a lot of money for some to lay out on a lottery ticket, so ‘For the Benefit of small Adventurers, 40th Shares may be purchased at 5s 6d each’. Bagnall also offered a service whereby, for the same 6d, customers could register their lottery ticket numbers and as they were drawn he would publish the number together with whether it was a blank or the amount of the benefit, noting that his anonymous procedure ‘doth not expose the Names and Fortunes of the Adventures in the Lottery to any Body’.
Despite these valiant attempts by local entrepreneurs to extend the market for tickets, and despite concerns in London that small fractions were becoming so accessible that servants and apprentices might be buying them, the lottery ended with 11,093 tickets unsold. These tickets, with a face value of £110,930, made only £103,272 10s in the drawing, thus leaving the Exchequer £7657 10s short.
For those of you hazy on old English currency, 1 pound (£1) was worth 20 shillings (20s), and a shilling was 12 pence (12d). The 6d (six pence) Bagnall charged for his services was half a shilling, or 1/40th of a pound.